Protip: Don’t Buy Porn Ads to Pitch A Startup to Investors

Last night a reader of the tech blog The Next Web noticed something strange on adult entertainment site PornHub: an ad asking people to pass on a video message to Sam Altman, the president of prestigious Silicon Valley startup incubator Y Combinator. The cheery video asks Altman to consider a fellowship application submitted by a company called Be A Pink Cow.

Maybe it was a clever move—the ad is garnering press attention, after all. But Altman is unimpressed.

“The strategy of buying ads on porn sites to get my attention will backfire,” he tells WIRED. “One of things we look for is people that use capital efficiently.”

Share

Daily Fantasy Sports Win the Startup Bowl Against New York

It’s time to brush off your rosters and open your wallets: Daily fantasy sports are legal in New York.

On Wednesday, Governor Andrew Cuomo signed a bill into law that would allow daily fantasy sports to resume operations in the state. The decision closes the book on one of the most high-profile cases against FanDuel and DraftKings, the once high-flying sites that New York Attorney General Eric T. Schneiderman sought to shut down as illegal gambling sites. In November, Schneiderman demanded both stop accepting what he called bets. FanDuel and DraftKings fought back, arguing that they were offering games of skill, which were already allowed under state law.

Still, the two ceased operating in March pending new legislation. Now, with Cuomo’s signature on the bill, daily fantasy sports have returned to the state—and with some healthy lead time before the next NFL season begins in September.

Related Stories

“This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections and more funding for education,” Cuomo said in a statement.

Under the newly minted instructions set to be enforced by the New York State Gaming Commission, sites like DraftKings and FanDuel must now pay up to $50,000 to operate, along with a 15 percent tax on revenues. No one under 18 can participate, and college and high school sports are off the table.

In fantasy sports, players create an imaginary lineup of players and earn winnings based on the athletes’ real-world performance. The idea is hardly new, but the online version offered by DraftKings and FanDuel pushed the concept into overdrive, allowing anyone to create multiple lineups with the possibility of playing (and winning) every day. Some players even used custom-built data models and analytics software to improve their odds of winning.

In a statement, Schneiderman said his office would enforce and defend the new law, and added that the amended lawsuit against DraftKings and FanDuel would continue forward. The suit still hopes to address consumer fraud claims against the two startups’ operations in New York, Schneiderman said.

Still, the new law represents a victory for the sites’ aggressive approach, hurtling forward in hyper-growth mode while operating in a legal gray area. Yes, they faced legal difficulties, but New York is now the seventh state this year—and perhaps the most visible—to legalize daily fantasy sports.

DraftKings CEO Jason Robins said the company was “thrilled” and excited that New Yorkers could once again partake in the games.

Even in these reactions, the two companies are following the path laid out by the startup many tech startups that have come before. It’s a win for fans and consumers, they say—the customer-centric that Amazon CEO Jeff Bezos has ridden to great riches. But of course it’s an obvious win for both their businesses, which in startup land is the ultimate fantasy.

Slack Raises $200 Million, Is Now A … Quadricorn?

A lot of people seem to think Slack is killing it as one of the best providers of productivity software out there—at least the kind of people who can afford to invest another $200 million in the company, at a brand new eye-popping valuation of $3.8 billion. It’s now almost a … quadricorn.

The windfall represents about 40 percent of the company’s total funding—$540 million. Slack raised its last round a year ago, raking in $160 million for a post-money valuation of $2.8 billion. This time around, the funding was led by Thrive Capital (a VC firm focused on media and internet investments), and included new investments from Accel, Social Capital, Spark Growth, and Comcast Ventures.

“As has always been the case, we are taking this opportunity to further secure our leadership position as we continue to execute on our ambitious growth plans,” says Stewart Butterfield, CEO and co-founder of Slack. “This capital adds to our existing reserves and increases our ability to focus on an uncompromising long-term, strategic view.”

Though $3.8 billion may sound high for an app that, let’s face it, you mostly use to distract your co-workers with GIFs, it’s actually on par with the compeition. One of Slack’s closest rivals, Atlassian—purveyor of the office chat app Hipchat—is publicly traded on the NASDAQ, where its market cap hovers in the neighborhood of $5 billion. Meanwhile, Slack isn’t doing all that badly itself: it has 2.7 million daily active users—800,000 of which are paid users—and 430 employees across the world.

The timing of Slack’s news is also fortuitous: It comes right after a passel of new products and announcements at Microsoft’s Build conference this week that resonate in Slack’s world. Among Microsoft’s flashier endeavors to own the productivity space: a framework for building bots. And bots, as any user knows, are a big part of what makes Slack Slack.

Judge Orders DraftKings and FanDuel To Shut Down in New York

A New York judge ruled this morning that DraftKings and FanDuel must cease operating ahead of a trial that’s expected to come next year.

The two companies are currently embroiled in a legal battle with New York Attorney General Eric Schneiderman over whether they are operating illegal gambling sites in the state. Last month Schneiderman sent cease and desist letters to the two companies, demanding they stop operating. While FanDuel has stopped accepting bets in New York, DraftKings has continued to operate.

For the attorney general’s office, this is the first step towards shutting down the sites. “We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law,” Schneiderman said in a statement today. “I have said from the beginning that my job is to enforce the law, and that is what happened today.”

The key issue the court must decide is whether daily fantasy sports depend on skill or are just games of chance. Schneiderman argues daily fantasy sports companies are operating illegally in New York because the games are ultimately based on luck. The companies have argued that not only do the games require skill, but in fact require more skill than seasonal fantasy sports games, which are already permitted in the state.

Both DraftKings and FanDuel say they’ll appeal the preliminary injunction. “We are disappointed with the Court’s decision, and will immediately file an emergency notice of appeal in order to preserve the status quo,” David Boies, DraftKings’ attorney, said in a statement. “Daily fantasy sports contests have been played legally by New Yorkers for the past seven years and we believe this status quo should be maintained while the litigation plays out.”

FanDuel added that it remains committed to bringing daily fantasy to New York. “New Yorkers have been able to legally play our games for more than six years, and today’s preliminary decision was wrong and we expect we will ultimately be successful,” a FanDuel spokeswomen said.

But the judge’s ruling today may signal an uphill battle for these billion-dollar upstarts, a battle whose outcome could have an impact beyond New York’s borders. If DraftKings and FanDuel are found illegal in the state, it could smooth the way for future litigation in states with similar statutes, including Alaska and New Jersey. These unicorns, it seems, are not quite elusive enough when it comes to the law.

UPDATE (December 11, 2015, 4:30 PM ET):
The New York State Court of Appeals granted an immediate stay of the preliminary injunction this afternoon. DraftKings says it will remain fully operational at this time in New York.

“We look forward to a full and fair hearing and are confident we will demonstrate clearly to the Court why we should be able to continue to offer our [daily fantasy sports] games in New York permanently,” Boies, DraftKings’ attorney, said in a statement.

Most Founders Think We’re in a Bubble, First Round Finds

As the number of so-called unicorn startups soars, the big question in Silicon Valley right now is whether we’re in a tech bubble—and, if so, how soon it will pop. While not everyone agrees that the bubble question itself is the right one to ask, it’s one that’s on the minds of those who stand to lose the most.

In a survey of more than 500 venture-backed startup founders, VC firm First Round Capital learned that they aren’t quite as optimistic as you might expect. A full 73 percent of founders surveyed answered yes, we are currently in a bubble, though founders of enterprise companies were more optimistic than those of consumer-oriented startups. (Fewer than 25 percent of the companies surveyed were in First Round’s portfolio, the firm says.)

Meanwhile, nearly every founder surveyed was less than optimistic about the prospect of raising more money in the future. Ninety-nine percent said they thought raising late-stage funding would either stay as difficult as it is now or become more difficult. Ninety-five percent said the same for seed funding, while 97 percent felt the same for series A funding.

On the question of going public, founders are divided, showing little agreement on whether to expect more, the same, or fewer IPOs next year. “There doesn’t seem to be a ton of clarity around this topic—even among late-stage companies, there’s still no consensus,” First Round said. But the voice of maturity does seem to have some influence. Earlier stage startups seem to think they’ll IPO in the next 3 years, the survey found, while later stage ones say it’ll take at least 7 more.

The survey results are chock full of insights (for example, Elon Musk is “far and away” the most admired tech leader), and well worth a look. After all, even though the survey only represents a small slice of sunny Silicon Valley, it’s clear that there’s at least some anxiety when it comes to the future.

On the site, Leap advertises twobuses with descriptions that hearken back to the company’s original dream. Each bus is packed with “leather passenger seats,” “reclaimed wood walls,” “display refrigerator,” “flat screen TV,” and “a marble concession counter.”

The starting bid? Five bucks each.

Bidding beings on October 6 and ends on October 8, so don’t worry, you have a few weeks to decide if you’re in the market for a new ride.

Soylent’s Latest Innovation: Putting Its Shakes In Bottles

Soylent, the venture capital-backed meal replacement shake company founded in 2013, has been the butt of many a joke about the excesses of the Silicon Valley startup scene. But it’s still in business, and today the company announced its latest product: a ready-to-drink version of its flagship beverage that will save customers the labor of mixing Soylent powder with water themselves.

Unlike the original, which was based on whey protein, the new Soylent product is vegan and based on soy. And now that it’s in bottles, Soylent could be sold at restaurants and convenience stores, paving the way to a market beyond people willing order the powder in bulk online. As for the jokes? Well, this video should be fodder for plenty more.